Regulators to seek PTC India Fin response on exit of directors

The Securities and Exchange Board of India (SEBI), the Reserve Bank of India, and the Ministry of Corporate Affairs are in the process of writing to the non-bank lender for power projects, seeking the company’s response to the exit of directors, of which One of the two people cited above said. BSE Limited and National Stock Exchange of India Limited (NSE) have already sought replies, the person said.

The independent directors, who make up half of the board in PTC India Financial, resigned on Wednesday, with the stock falling up to 19% when markets opened on Thursday. Shares of parent PTC India also felt the heat with a fall of 11%.

To reassure investors, the lender said the matter will be “addressed at the board level and subsequent updates will be appropriately communicated to all stakeholders. In a detailed statement later in the day, the management denied the allegations.” “We refute the allegations made by the outgoing directors, which were on account of adherence to best corporate governance practices under the guidance of the promoter, regulator and Government of India,” it said.

When asked about the company’s response to questions raised by the regulators, a senior PTC India Financial official said the company would respond “when referred”. Emails sent to spokespersons of PTC India Financial, SEBI, RBI and MCA did not find one. Feedback.

Separately, PTC India in a statement to the exchanges said that it is committed to the highest standards of corporate governance in its functioning as well as across its units.

“We are monitoring the situation closely and have noticed that there are differences at the operational and board level of PFS on some issues. These issues are being looked into by a senior-level committee of the company. We have taken initiative to solve governance issues. We are committed to streamline all operational processes and adopt best available practices of NBFCs,” PTC India said.

Independent directors Kamlesh Vikamsey, Thomas Mathew and Santosh Nair have resigned, exposing “instances of serious lapses in corporate governance”, an after-market hours filing by PTC India Financial said on Wednesday. Among the issues raised by the directors was the appointment of Ratnesh as Finance. Director and Chief Financial Officer. The directors alleged that the chairman and managing director stopped Ratnesh’s appointment even after it was concluded through a “board-driven process”.

Citing yet another instance of “misleading” investors and the board, Vikamsey said the fraud committed by a borrower, IL&FS Tamil Nadu Power (ITPCL), was not reported to the board. “The fact of fraud has been concealed in the annexure,” alleged Vikamsey.

An ITPCL spokesperson said: “The ITPCL loan account has not been declared as fraudulent by any lender till date and as such, has not been reported as fraud in RBI CRILC reporting. The account has been declared as fraudulent. Any such information/mention to be known is factually incorrect.”

Another reason that triggered the sudden withdrawal was related to the loan account of NSL Nagapatnam Power. It was alleged that the forensic report on the loan account of NSL Nagapatnam Power Loan 125 crore was withheld from the board for two years and it was disclosed in December 2020 itself.

In addition, a. changes were made to the terms of 150 crore loan for the road project without board approval had been suggested by a panel of two independent directors that the Nagapatnam issue be reported to the RBI “as a suspected fraud”, the directors said.

Sriram Subramanian, managing director of InGovern Research Advisory Services, a proxy advisor, said the resignation letters gave the impression that the board was being run like the personal fiefdom of the chairman and managing director.

“There does not appear to be any accountability to any shareholder and even more so to the 64.99% shareholder – PTC India. The directors could have asked the CMD to step down instead of resigning. But since the board was made up of 6 persons, the casting vote was with the CMD. The only way forward for this is through regulatory action; The board has become dysfunctional with the CMD in doubt and independent directors ousted from the board,” Subramaniam said.

Amit Tandon, Chief Executive, Institutional Investor Advisory Services India Ltd, said the issues raised by the directors point to the deep malaise in the way the company is run.

“What we have heard so far is worrying; So, it would be good to get the view of the company. Parents, it will be equally important to understand the role that PTCs play,” Tandon said.

JN Gupta, co-founder, Stakeholder Empowerment Services, said such action by independent directors is good for governance as the directors have truly asserted their independence. “However, instead of resigning, the director could have referred these allegations to regulators,” he said.